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Regulatory capital requirements | 12 Months Ended
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Dec. 31, 2018
Regulatory Capital Requirements |
Regulatory Capital Requirments | Note 22 – Regulatory capital requirements The Corporation, BPPR and PB are subject to various regulatory capital requirements imposed by the federal banking agencies. Failure to meet minimum capital requirements can lead to certain mandatory and additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s consolidated financial statements. Popular, Inc., BPPR and PB are subject to Basel III capital requirements, including also revised minimum and well capitalized regulatory capital ratios and compliance with the s tandardized approach for determining risk-weighted assets. The Basel III Capital Rules established a Common Equity Tier I (“CET1”) capital measure and related regulatory capital ratio CET1 to risk-weighted assets. The Basel III Capital Rules provide that a depository institution will be deemed to be well capitalized if it maintained a leverage ratio of at least 5%, a CET1 ratio of at least 6.5%, a Tier 1 risk-based capital ratio of at least 8% and a total risk-based ratio of at least 10%. Management has d etermined that at December 31, 2018 and 2017, the Corporation exceeded all capital adequacy requirements to which it is subject. The Corporation has been designated by the Federal Reserve Board as a Financial Holding Company (“FHC”) and is eligible t o engage in certain financial activities permitted under the Gramm-Leach-Bliley Act of 1999. At December 31, 2018 and 2017, BPPR and PB were well-capitalized under the r egulatory framework for prompt corrective action. The following tables present the Corporation’s ris k-based capital and leverage ratios at December 31, 2018 and 2017 under the Basel III regulatory guidance
|  | Actual |  |  | Capital adequacy minimum requirement (including conservation capital buffer) |
(Dollars in thousands) |  | Amount | Ratio |  |  | Amount | Ratio |
|  | 2018 |
Total Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
Corporation | $ | 5,354,199 | 19.54 | % | $ | 2,706,117 | 9.875 | %
BPPR |  | 3,900,536 | 19.00 |  |  | 2,027,005 | 9.875 |
PB |  | 1,148,253 | 17.82 |  |  | 636,450 | 9.875 |
Common Equity Tier I Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
Corporation | $ | 4,631,511 | 16.90 | % | $ | 1,746,987 | 6.375 | %
BPPR |  | 3,638,009 | 17.72 |  |  | 1,308,573 | 6.375 |
PB |  | 1,085,829 | 16.85 |  |  | 410,873 | 6.375 |
Tier I Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
Corporation | $ | 4,631,511 | 16.90 | % | $ | 2,158,043 | 7.875 | %
BPPR |  | 3,638,009 | 17.72 |  |  | 1,616,473 | 7.875 |
PB |  | 1,085,829 | 16.85 |  |  | 507,549 | 7.875 |
Tier I Capital (to Average Assets): |  |  |  |  |  |  |  |
Corporation | $ | 4,631,511 | 9.88 | % | $ | 1,875,057 | 4 | %
BPPR |  | 3,638,009 | 9.62 |  |  | 1,512,568 | 4 |
PB |  | 1,085,829 | 12.42 |  |  | 349,580 | 4 |
|  | Actual |  |  | Capital adequacy minimum requirement (including conservation capital buffer) |
(Dollars in thousands) |  | Amount | Ratio |  |  | Amount | Ratio |
|  | 2017 |
Total Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
Corporation | $ | 4,985,265 | 19.22 | % | $ | 2,399,052 | 9.250 | %
BPPR |  | 3,793,268 | 19.73 |  |  | 1,778,498 | 9.250 |
PB |  | 1,083,171 | 17.05 |  |  | 587,809 | 9.250 |
Common Equity Tier I Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
Corporation | $ | 4,226,519 | 16.30 | % | $ | 1,491,303 | 5.750 | %
BPPR |  | 3,546,121 | 18.44 |  |  | 1,105,553 | 5.750 |
PB |  | 1,010,232 | 15.90 |  |  | 365,395 | 5.750 |
Tier I Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
Corporation | $ | 4,226,519 | 16.30 | % | $ | 1,880,338 | 7.250 | %
BPPR |  | 3,546,121 | 18.44 |  |  | 1,393,958 | 7.250 |
PB |  | 1,010,232 | 15.90 |  |  | 460,715 | 7.250 |
Tier I Capital (to Average Assets): |  |  |  |  |  |  |  |
Corporation | $ | 4,226,519 | 10.02 | % | $ | 1,687,432 | 4 | %
BPPR |  | 3,546,121 | 10.67 |  |  | 1,328,818 | 4 |
PB |  | 1,010,232 | 11.69 |  |  | 345,681 | 4 |
The following table presents the minimum amounts and ratios for the Corporation’s banks to be categorized as well-capitalized.
|  | 2018 |  |  | 2017 |
(Dollars in thousands) |  | Amount | Ratio |  |  | Amount | Ratio |
Total Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
BPPR | $ | 2,052,664 | 10 | % | $ | 1,922,700 | 10 | %
PB |  | 644,506 | 10 |  |  | 635,469 | 10 |
Common Equity Tier I Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
BPPR | $ | 1,334,231 | 6.5 | % | $ | 1,249,755 | 6.5 | %
PB |  | 418,929 | 6.5 |  |  | 413,055 | 6.5 |
Tier I Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |
BPPR | $ | 1,642,131 | 8 | % | $ | 1,538,160 | 8 | %
PB |  | 515,605 | 8 |  |  | 508,375 | 8 |
Tier I Capital (to Average Assets): |  |  |  |  |  |  |  |
BPPR | $ | 1,890,709 | 5 | % | $ | 1,661,023 | 5 | %
PB |  | 436,975 | 5 |  |  | 432,102 | 5 |
The final Basel III capital rules require the phase out of non-qualifying Tier 1 capital instruments such as trust preferred securities. At December 31, 2018 the Corporation had $374 million in trust preferred securities outstanding which does not qualify for Tier 1 capital treatment, but instead qualified for Tier 2 capital treatment. The Bas el III final rules also include a phase-in capital conservation buffer of 2.5% of risk-weighted assets that is effectively layered on top of the minimum capital ris k-based ratios, which places restrictions on the amount of retained earnings that may be used for distributions or discretionary bonus payments as risk-based capital ratios approach their respective “adequately capitalized minimums.” The following table pr esents the capital requirements for a standardized approach banking organization under Basel III final rules.
|  |  |  |  | Minimum Capital Plus Capital Conservation Buffer
| Minimum Capital |  | Well-Capitalized |  | 2018 |  | 2019 |  | 2020 |  | 2021 |
Common Equity Tier 1 to Risk-Weighted Assets | 4.5 | % | 6.5 | % | 6.375 | % | 7.000 | % | 7.000 | % | 7.000 | %
Tier 1 Capital to Risk-Weighted Assets | 6.0 |  | 8.0 |  | 7.875 |  | 8.500 |  | 8.500 |  | 8.500 |
Total Capital to Risk-Weighted Assets | 8.0 |  | 10.0 |  | 9.875 |  | 10.500 |  | 10.500 |  | 10.500 |
Leverage Ratio | 4.0 |  | 5.0 |  | N/A |  | N/A |  | N/A |  | N/A |

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- Definition The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1C -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958572-112826 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1D -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958573-112826 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958570-112826 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958569-112826 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1G -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958577-112826 Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1F -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958575-112826 Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1E -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958574-112826 Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958568-112826 Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1H -URI http://asc.fasb.org/extlink&oid=84167132&loc=d3e65071-112826 + Details
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